UPDATE 1-Statoil takes $350 mln hit on Angola exploration halt

OSLO Nov 21 (Reuters) - Norway's Statoil said on
Friday it was halting exploration in Angola after poor drilling
results, retreating from an offshore area it had high hopes for
and capping a poor year for exploration.

Statoil said it was cancelling a three-year contract with
Stena Drilling, handing back a drilling ship two years early and
taking a $350 million charge in the fourth quarter related to
the contract, the drilling and the value of the Angolan blocks.

Statoil had high hopes for Angola's offshore pre-salt blocks
38 and 39 because the geology is similar to Brazil's, where
major oil discoveries have been made in similar rocks.

"Statoil's first well results from the area have been
disappointing and although the company still sees remaining
prospectivity in the basin and on the Statoil acreage, more time
is needed to evaluate the well results and mature new prospects
before deciding on future activities," it said in a statement.

The firm still has commitments to participate in several
more wells in Angola, but only as a partner and not an operator.

"This will add to an already bad quarter for them as oil
prices have dropped from the third quarter," said Christian
Yggeseth, an analysts at Arctic Securities.

"We might be facing another negative quarter, at least in
the upstream international division."

Statoil is cutting capital expenditure and delaying or
cancelling projects to save cash after a 10-year spending spree
and a nearly 30 percent fall in crude prices since June.

It has already cancelled or suspended several rig contracts
in 2014 -- just a year after paying near record rates to secure
drilling capacity -- because costs have become too high and as
it company ran out of prospects to drill.

Statoil, the most successful offshore explorer last year,
has had a difficult 2014 with major exploration failures,
including in the Norwegian Arctic and the Gulf of Mexico.
(Reporting by Nerijus Adomaitis, Balazs Koranyi and Stine
Jacobsen; editing by David Clarke)